- Tencent Holdings Ltd fell the most in over a year, dragging Chinese gaming stocks lower as investors grew concerned about its mobile gaming business and some funds rotated back into artificial intelligence (AI)-related names.
- The company’s Hong Kong-listed shares sank 7.1%, the most since April 2025, as traders cited worries that its mobile gaming revenue could have declined in the June quarter.
- The sell-off dragged the Hang Seng Tech Index down 3%, while fellow game developers NetEase Inc and XD Inc also dropped more than 5%.
- Morningstar noted that the drop is not driven by fundamental factors, despite the market expecting a decline in Tencent's mobile gaming revenue.
- The likely revenue drop could give investors an excuse to take profits after Tencent’s recent rally, said Steven Leung, an executive director at UOB Kay Hian.
- Bernstein estimates Tencent’s mobile gaming revenue fell 2.6% in the second quarter from a year earlier.
- Total billings from its three biggest titles — Honor of Kings, Peacekeeper Elite, and PUBG Mobile — likely dropped 13% during the period, according to analysts led by Robin Zhu.
- Adding to the pressure on Tencent, Hong Kong-listed stocks don’t benefit from support by China’s so-called national team, leaving them more vulnerable to outflows.
Tencent Holdings Ltd saw its shares plunge 7.1%, marking the steepest decline in over a year, as fears over its mobile gaming revenue surfaced. Analysts from Bernstein estimate a 2.6% drop in mobile gaming revenue for the second quarter, with total billings from major titles like Honor of Kings and Peacekeeper Elite likely down 13%.167
The sell-off, which also affected the Hang Seng Tech Index by 3%, was attributed to profit-taking after a recent rally and a shift in investor focus towards AI-related stocks. Steven Leung from UOB Kay Hian noted that the potential revenue decline could trigger profit-taking following a 10% gain in the first three weeks of July.5
Adding to the pressure, Leonid Mironov from Gavekal Capital pointed out that the absence of a supportive 'national team' for Hong Kong stocks leaves them vulnerable to outflows. Ivan Su from Morningstar emphasized that the decline is not fundamentally driven, asserting that Tencent's gaming business remains healthy and its AI investments were previously communicated by management.48
The sell-off extended Tencent's year-to-date retreat to over 26%, erasing much of its recent gains. As investors rotate out of technology stocks, the market remains cautious about Tencent's future performance amid ongoing concerns over its mobile gaming sector.
“Tencent's Hong Kong-listed shares sank 7.1%, dragging the Hang Seng Tech Index down 3% as fellow developers NetEase and XD Inc fell over 5%. Some funds rotated into AI-related stocks, while investors await Tencent's second-quarter earnings on Aug 12.”
